Rising Fuel Costs Hit Vietnam’s Gig Workers Amid Iran War Impact
In Vietnam, rising fuel costs are significantly impacting gig workers, especially amid the ongoing conflict related to Iran. E-hailing drivers and other local workers are feeling the financial strain as fuel prices soar, limiting their earnings and increasing operational costs.
Impact of Fuel Price Increases on Gig Workers
Nguyen, an e-hailing driver in Ho Chi Minh City, shared that after driving for seven hours, half of his earnings went toward fuel expenses. He reported making approximately 240,000 Vietnamese dong (around $9.11), while spending about 120,000 Vietnamese dong (approximately $4.56) on petrol. Such costs are unsustainable for many in the city.
- Vietnam typically imports about 80% of its crude oil from Kuwait.
- Fuel prices have increased substantially, with diesel costs more than doubling and petrol prices rising by nearly 30%.
These rising costs are not just affecting drivers; the entire economy is feeling the pressure. Many gig workers have reported shutting off their apps temporarily due to high fuel expenses, questioning government support while they wait for prices to stabilize.
Government Response
In response to the escalating situation, Vietnam’s government has implemented several emergency measures. Prime Minister Pham Minh Chinh announced a suspension of environmental taxes on diesel and petrol, effective until mid-April, to alleviate costs for citizens. This decision, while aimed at stabilizing the economy, could result in a revenue sacrifice of approximately $273 million.
Broader Economic Implications
The impact of fuel price hikes is evident across various sectors. Public transport systems, such as buses in Ho Chi Minh City, are struggling due to increased operational costs. Some companies have raised ticket prices but still find themselves operating at a loss.
In coastal regions like Binh Thuan, fishermen are also affected. Rising fuel costs have forced them to seek cheaper alternatives and negotiate lower sale prices for their catch. In many cases, affordable catch which would have previously sold for 800,000 Vietnamese dong ($30) is now only selling for 650,000 Vietnamese dong ($24).
Social Consequences
Rising living costs are forcing families to make significant lifestyle adjustments. Parents in remote areas are leaving their children with relatives to work in the cities. With commuting becoming increasingly expensive and stagnant wages, family time is often sacrificed.
Future Strategies for Energy Independence
Economists believe that this crisis underscores the importance of Vietnam achieving greater energy independence. Nguyen Khac Giang, a fellow at the ISEAS-Yusof Ishak Institute, noted the necessity for increased investment in domestic refineries. Currently, Vietnam operates only two refineries, which is not sufficient for the country’s needs.
Officials recently visited the Nghi Son Refinery, which supplies about 40% of the nation’s petrol, to discuss securing alternative crude sources as current supplies are predicted to deplete by the end of May.
Long-term Solutions and Current Measures
Amid the ongoing crisis, companies like Vingroup are reconsidering their investment strategies. They are pivoting their focus towards renewable energy projects rather than expanding liquefied gas infrastructure due to the volatility in fuel prices.
While some relief may come from the recent tax cuts that are projected to lower petrol prices by about 25% and diesel by 5%, the situation remains challenging for many Vietnamese. Workers and families alike continue to navigate the tough economic landscape shaped by rising fuel costs and broader geopolitical issues.
